Outline v.1.

0
August 26, 2020
A Trustless Privacy Provider for Decentralized Finance Applications

1. Purpose
This proposal consists of a privacy and scalability enhancement system
for ERC20 tokens: a bridge-like mechanism that extends NIX’s blockchain
embedded privacy layers to Ethereum and ERC20 tokens transactions in a
permissionless decentralized approach. This is achieved by a modular
framework that allows users to securely tokenize and mirror ERC20 assets
from the Ethereum network into NIX Platform’s Proof of Stake secured chain;
as such assets are minted into NIX Ghost Tokens (NGT), they are placed into
tokens-categorized global zero-knowledge accumulators, which privatize
transactions and amounts transferred to the NIX chain.

The NIX Bridge design will not be limited to the Ethereum network, instead,
its modular architecture becomes a major foundation for the bridge to connect
to multiple ecosystems, such as Polkadot, Cardano and Tezos, with the final
target of offering privacy solutions for Decentralized Finance applications.

2. Privacy Proposition
Apart from the scaling benefits that NIX Bridge offers to Ethereum and ERC20
token holders, the privacy value is the central use case. The way NIX Bridge
proposes to solve privacy layers for different ecosystems greatly outweighs
any time-based coin mixer via the Ethereum chain, the next in line technology
would be Ethereum’s native on-chain privacy.

Most on-chain privacy based layers are time reliant accumulators that mix all
participants into one transaction, in this scenario anonymity set is fixed to the
participants amount of that specific transaction.

NIX Bridge differs from above’s method by creating zero-knowledge mixers of

its own when ERC20 assets are tokenized into NGT’s, and also by allowing
countless on-NIX-chain transactions. To achieve so, NIX adds a new
zero-knowledge system to its privacy protocol, one that is a matured version
of burn and redeem that requires no trusted setup nor fixed denominations and
offers a top anonymity set of about 100,000.

Lelantus protocol currently being considered.

nixplatform.io
3. Elements and Use Case
Below there is a NIX Bridge element-centered process explanation that depicts
how private transactions function. The case specifies an operation where 100
DAI tokens are privately traded for LINK in the Ethereum network using
NIX Platform structure.

- Input: Smart contracts are used to lock DAI tokens in the Ethereum chain, which
are controlled by the NIX Bridge; as this occurs, a one to one amount of DAI are
converted into NGT-DAI, since the latter are supported by NIX Platform, they are
transferred and minted in NIX chain accumulators.

- NGT-DAI Accumulator: This point is where privacy is added; users are capable of
trading unlimited amounts of NGT-DAI for any other NGT-ERC20 token (NGT-LINK
in this case) using NIX’s zero-knowledge protocol, which accounts for anonymity
and confidentiality of the transactions. This protocol also permits the partial
redemption of coins on quantities less or equal to the sum originally minted.

- Output: Once the user decides to redeem their minted coins for ERC20 tokens
(LINK), the desired amount of NGT-DAI are traded for NGT-LINK, which are
finally burnt on the NIX chain and redeemed as LINK tokens from the Ethereum
smart contract pool controlled by NIX Bridge.

4. Incentives and Economics

Ghostnodes play a vital role in the NIX Bridge architecture as they endorse the
NGT creation process, meaning that they back and control the smart contract
pool in the ETH network.

The issuance of NIX NGT from an ERC20 token involves a minting fee of 50 NIX ,
this incentive is then distributed as a reward to Ghostnode operators who
participate in the NIX Bridge ecosystem.

The other reward for Ghostnode operators is a flat 0.1 NIX fee that covers all
transactions made once users own NGT in the NIX network. Both minting and
transaction fees are equally allocated to NIX Bridge operating node holders
on a daily basis.

nixplatform.io
Although NIX Bridge’s fees are stated as fixed amounts, their ultimate value is
evidently subject to market conditions; to confront this scenario, NIX Platform
foresees the possibility to engage on third party services, such as Oracles, that
provide a link between NIX fees and off-chain assets that are considered
stable; this way, fees remain stable and pegged to a fixed amount of a steady
resource.

5. Requirements
Ghostnode holders who aspire to participate in the NIX Bridge system are
required to run Geth light nodes. This may or may not increase the performance
requirements for a Ghostnode VPS.

6. Future
NIX Bridge’s structure looks forward to connecting to Ethereum chain at first,
but its purpose is to be designed in a modular way so that any tokenized
platform can be added to the bridge without much development. In the long
run, the proposal sets a much more ambitious goal: the development of a full
zero-knowledge based swap DEX on NIX, where users can easily and privately
trade their tokens - think of a uniswap type dApp based on NIX that sets the
foundation to provide privacy for decentralized finance applications.

7. Conclusion
NIX Bridge ecosystem aims to privatize tokens in a seamless, secure and fast
manner, while providing anonymity to decentralized finance applications. It
consists of an external infrastructure pegged to tokenized chains that relies
on a) Tokenized networks, b) NIX’s Ghost Tokens and blockchain, and
c) zero-knowledge privacy mixers to provide a never seen level of anonymity
and confidentiality.

nixplatform.io